Oakajee delay just two to three years: Barnett

Western Australian Premier Colin Barnett expects the Oakajee iron ore port and rail project to be delayed by two to three years, and is confident the development will go forward.

Japan's Mitsubishi put on hold plans to develop the $5.9 billion Oakajee port and rail project and the $3.7 billion Jack Hills iron ore project last week as it was unable to line up a partner to help with funding.

"I wouldn't write Oakajee off. There's 13 billion tonnes of magnetite iron ore in that province, there's probably over $3 billion in mainly Chinese investment in the area," Western Australian Premier Colin Barnett told reporters on the sidelines of a resources conference in Perth.

He added that the Western Australian government will pursue discussions with Chinese state-owned enterprises to develop the port and rail project.

"The project doesn't all have to happen in one go, it can be staged... There's also scope to build a port, initially, of a lesser standard," Mr Barnett said.

For example, the port could operate for 250 days a year and grow with market demand instead of working all year round, he said.

Advertisement

Oakajee is one of several ports the state had hoped would be up and running by the middle of this decade but has become a casualty of the slowdown in Chinese growth and reluctance by Chinese companies to invest offshore after facing long delays and massive cost overruns on existing projects.

Western Australia has the country's fastest growing economy, thanks to $167 billion in mining and gas projects, but it is facing a slowdown as miners shelve developments, hit by soaring costs, uncertain demand and a persistently strong Aussie dollar.

One of the state's major projects is Woodside Petroleum's Browse liquefied natural gas (LNG) development in northwestern Australia.

Woodside and its partners are due to decide on whether to build an LNG plant for gas from the Browse Basin at a controversial location in Western Australia called James Price Point by mid-2013.

Royal Dutch Shell, which has expertise in floating LNG technology, has recently upped its stake in the project, sparking speculation that the site will be abandoned in favour of a floating LNG plant.

"The gas needs to come onshore," Mr Barnett said, adding that the James Price Point site has enough space for three LNG developments in total.

The Premier also said processing the gas offshore would cost Australian jobs.

"If it's a floating LNG, that will be constructed entirely offshore there will be no Australian jobs at all, I would think that would be unacceptable to the Australian public," Mr Barnett said.

Woodside has also been in discussions with East Timor for years over the development of gas resources for the Sunrise LNG project. East Timor has advocated for the plant to be built onshore, where it will provide jobs, while Woodside has argued that the more economical option would be floating LNG.